Re-appointment of Sir Jon Cunliffe as Deputy Governor for Financial Stability at the Bank of England Contents

1The re-appointment of Sir Jon Cunliffe

Background on Sir Jon Cunliffe

4.Sir Jon became Deputy Governor for Financial Stability at the Bank of England on 1 November 2013. As part of this role, Sir Jon sits on the Monetary Policy Committee (MPC), the Financial Policy Committee (FPC), the Prudential Regulation Committee(PRC) and the Court of the Bank of England. He also has executive responsibility at the Bank for financial stability, financial market infrastructures, resolution and international.

5.Prior to this role, Sir Jon was the UK Permanent Representative to the EU from 2012 to 2013 and the Prime Minister’s Adviser on Europe and Global Economic Issues and the Second Permanent Secretary to the Cabinet Office. Before joining the Cabinet office, he had several roles within HM Treasury, his final one being Second Permanent Secretary with responsibility for the Treasury’s International and Finance Directorate from 2002 to 2007. Sir Jon Cunliffe holds a BA and MA in English Language and Literature from the University of Manchester.

Oral evidence

6.In oral evidence, the Committee questioned Sir Jon about his prior experience as well as wider questions around the outlook for the economy. Topics covered during the session included:

The state of contingency preparations by UK and EU authorities and firms for a “no deal” Brexit;

The scale of and trend in cases of bullying and harassment at the Bank of England, and the steps being taken by senior management to address it;

The options for a negotiated future relationship for cross-border financial services between the UK and EU after Brexit;

The prospects for regulatory changes to enhance the competitiveness of UK financial services after Brexit;

Global risks to financial stability arising from stresses in emerging markets and the tightening of monetary policy in the United States, and the exposure of the UK to these risks;

How a trade war between China and the United States could complicate Chinese efforts to improve the resilience of their debt markets;

The risks to financial stability arising from rapid growth in leveraged lending, and its similarities and differences with growth in sub-prime lending prior to the Financial Crisis;

The potential risks to fiscal stability in the UK highlighted in the IMF’s October 2018 Fiscal Monitor;3

Trends in the resilience of the UK banking sector and developments in the Bank’s approach since it commenced annual stress testing in 2014, and the progress of banks towards their 2022 capital buffer requirements;

The decision to raise Bank rate to 0.75 per cent in August given uncertainty about the relationship between inflation and unemployment;

The risks of a sharp devaluation of sterling, the consideration he gives to the exchange rate in the setting of monetary policy, and the use of official foreign currency reserves to meet monetary and financial stability objectives; and

The risk that the presence of the Governor and three of the Deputy Governors across all three of the Bank’s main policy committees will give rise to ‘groupthink’, and how the presence of external members may mitigate that risk.

Conclusion

7.The Committee is satisfied that Sir Jon has the professional competence and personal independence to be re-appointed as Deputy Governor of Financial Stability at the Bank of England. We wish him every success in his role.